‘No incentive’ to invest in Australian spirits
Australian distillers could be “outpaced” by other markets due to the country’s high spirits tax, a trade body has warned.
Trade groups Spirits & Cocktails Australia and the Australian Distillers Association appeared before the House of Representatives Standing Committee on Industry, Science and Resources at Parliament House as part of a government inquiry into food and beverage manufacturing.
Australian Distillers Association chief executive Paul McLeay believes the country’s distilling industry should be key to the government’s Future Made in Australia policy.
He said the government’s “outdated policy settings and inaction” has resulted in Australian spirits having a “significant competitive disadvantage” in its home market and across the world.
McLeay continued: “Just as previous governments recognised the potential of Australian wine, with the right policy settings and infrastructure, Australian spirits can realise a AU$1 billion export opportunity by 2035.
“If we do not act now, Australian distillers will be outpaced by other emerging spirits markets in meeting growing consumer demand for premium products – and Australia will miss out on the economic windfall that could be ours.”
Spirits & Cocktails Australia director Nicole Lestal called on the government to “release the handbrake” on the current duty system.
“While Australian spirits account for 20% of alcohol consumption, it accounts for 50% of alcohol taxes,” she told the committee.
“This structural disadvantage impedes innovation and opportunities to re-invest in Australian spirits manufacturing.
“Our global spirits industry experience tells us that when governments act decisively and across multiple fronts to provide coordinated support, it incentivises investment to achieve scale and unlock further opportunities for economic value-add and innovation.”
Meanwhile, Mark Hill, the managing director for Suntory Global Spirits’ Oceania arm told the committee that there is “little or no incentive for global spirits companies to invest in the expansion of the Australian spirits industry while our excise rates are so overwhelmingly uncompetitive with other countries like Japan, the US, Ireland, Scotland and Mexico”.
Kylie McPherson, director of public affairs at Brown-Forman Australia, made a similar point, stating that the country’s tax rates for spirits – the third highest in the world – “inhibits” investment in Australia for companies like Brown-Forman.
David Vitale, vice-president of the Australian Distillers Association and founder of Starward whisky, noted the lack of support for Australian spirits by the government at trade show ProWein.
“When Starward shows up at prestigious international trade shows like ProWein, I blow my entire export marketing budget on a trestle table that gets lost in the acres of exhibitors, while Australian winemakers have pride of place in an elaborate pavilion, proudly showcasing their provenance,” Vitale explained.
“It’s unfortunate that when we ask Austrade for the same opportunities, we are informed that their support does not extend to spirits. The consumer demand is there, we just need government to recognise the potential of our industry.”
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